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Startups Vs Scaleups

This article is written by Jeremiah Uke, a Contributor Author at Startup Istanbul.

Over
the last 2 decades in technology eco-systems all over the world, startups have
been the major headliners for most discussions in driving economies and
innovation, until much recently. Some attention has been pushed towards
scaleups which are a similar concept to startups, but with a few differences
that set them apart.

In
simple words, a startup is a relatively new company which is just a few years
old or less, startups are characterized with having big plans for growth, and
usually have no geographic restrictions, they are open to spreading across
countries if they are able to.

So,
if you own something in the range of a provisional store in California, with no
plans of growing your store into something bigger, or spreading to a new
location, then you are just a small business, and not a startup.

A
scaleup on the other hand, is a company with a validated product and business
model, has an average annual return of at least 20% in the past 3 years, and at
least 10 employees. Scaleups are evolved startups which have succeeded in
solving the challenges of market research, development, and finding a stable
working business model.

Also,
scaleups are characterized by huge numbers. Huge numbers expressed in areas
such as revenue, number of employees, and the number of users or customers they
get. One key difference between these two closely related concepts is found in
the challenges they face, a startup’s biggest challenge is finding a scalable
business model that can be repeated year after year. While a scaleup’s biggest
challenge is growing the already discovered business plan to gain more revenue
and traction.

Because
they are yet to fully figure out their product-market
fit, startups do a lot of experiments and they spend a lot just to
figure out what will earn them revenue. Scaleups have it much easier in this
area, they know exactly how much they would get when they put a particular
amount of money in the business.

When it comes to their Team & workforce, startups need a
small number of people who are good at doing many things. For example, a
startup can have a founder who is able to write code, draw up financial
projections and reports, and attend meetings with potential investors or
business partners.

At the other end, scaleups need
specialists, they employ many people who are able to play just one role,
scaleups employ engineers, support staff, project managers, designers,
developers, administration and human resources, and several managerial
personnel. Of course, these scaleups have to find a way to make all members of
their team work as one unit.

Startups spend their time trying
to find out their strongest points, so they can leverage on these strong points
and convert them to some kind of value, Having already figured out their
strongest points, scaleups spend their time trying to figure their weak points,
fixing them and tightening and loose ends.

Due to the huge amount of revenue
they generate, scaleups are capable of making their founding team relatively
rich. While startups are more likely to push their founders into the limelight,
making them famous in the process.

You really can not remain at the
startup stage for so many years, startups either die off, or transition to
becoming scaleups after years of being in business, there really isn’t any
middle ground.